Friday, September 3, 2010
Done with politics, oilman Wink Hartman mulls a bank purchase
Businessman says he's looking for a niche with small businesses
Wichita Business Journal - by Chris Moon
Wink Hartman says he’s in the market for a bank.
The Wichita businessman says his staff has spent the past six months examining a potential bank purchase. Hartman says he’s been personally engaged in the search during the past month and hopes to get a deal inked by the end of the year.
He says he’s made no offers yet.
“We’re throwing darts and seeing if we can get anything to stick,” Hartman says.
He says his interest in the industry stems from the banking and financial regulation overhaul that recently was passed by Congress and likely will have major effects on banks, both large and small.
Banks already are struggling with recouping lost income from overdraft fees, which are being more tightly regulated by the federal government. They also face changes in debit card interchange fees, another likely revenue hit.
Hartman sees it as a way to get his foot into the door of the industry.
“I am reviewing the banking sector for opportunities, and the reason I am doing that is my belief that when people are running out of the room yelling fire, there are a lot of reasons to run into the room looking for opportunities,” says Hartman, who recently lost a bid for the Republican nomination in the Fourth Congressional District.
Hartman’s opinion seems to match the consensus among bank executives and consultants.
“There’s an opportunity buy banks very cheap, at less than book value — that is, if you’ve got the ability to go in and run them right,” says Jerry Swords, of Kansas City bank consulting firm Swords Associates Inc.
Looking around Wichita
Hartman says he is looking at banks in about six counties surrounding Wichita, encompassing perhaps a 100-mile radius. Any deal he ends up doing would be “considered a very small acquisition — a starter bank, if you will,” he says.
Hartman says he considered starting a bank but ruled that out in favor of a purchase.
He wouldn’t say how big of a bank he might pursue. He will look at both its lending focus and asset size.
“Basically, we’re looking for a small niche in the market if one’s available,” Hartman says. “We’ve got to delineate the type of market we wish to approach. ... Do we want to go after large corporate clients? Probably not. Do we want to go after small business people? Probably so.”
Hartman’s potential foray into the banking sector fits with his reputation for thinking outside the box. Historically, his interests have been in oil.
But he also has developed real estate, launched restaurants and is owner of the Wichita Wild football team.
He also owns Hartman Arena, which opened last year in Park City.
Dean Johnson, managing director of Lenexa-based Capital Corp. LLC, which brokers bank deals in Kansas, says there are more banks willing to sell today than in years past.
“Some bankers are tired and wanting to get out of all this regulatory B.S.,” Johnson says.
But Hartman will face some substantial hurdles.
The FDIC in its most recent Quarterly Banking Profile said the second quarter was the first time in 38 years that no new banks were started across the country.
And Hartman isn’t a banker.
“The biggest challenge for somebody like him, and it’s nothing personal, non-bankers are having a difficult time getting regulatory approval,” Johnson says.
So Hartman will have to put together a staff of seasoned bank executives. Already with Hartman is Steve Worrell, a former CFO at Salina-based Sunflower Bank and a 25-year veteran of the industry.
Johnson says any bank purchaser also faces stiff capital requirements.
A $10 million bank typically needs about $1 million in capital.
But Johnson says if someone buys it with plans to grow it into a $50 million bank over the next few years, regulators will require the buyer to have the necessary capital in place today. So that’s $5 million.
But there are banks available in Kansas, and the expectation is that there will be more, says Kyle Russell, president of Verus Bank, which has said it is looking for acquisitions this year.
Sometimes banks are in financial stress.
Other times, Russell says, bank owners come to the realization that the threshold for bank profitability is higher with the tougher regulatory environment they are under.
Banks need to get bigger to spread out those costs over a wider asset base.
“If you’re not at a certain size threshold, it’s really going to impair what you do,” Russell says.
A lot of Kansas banks are beneath that threshold, he says.
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